Reid Hoffman had a great line at the last Startup School to the effect of "Most mainstream web users can remember 7 +-2 web services. If this is true (and I believe it is) $500K on domain names is not a bad investment for a few reasons:
1. Easy to say/spell. I work for a startup where I have to spell the name of the company every time I talk to someone. We are a medical company so its not a big marketing issue, but having to explain your site is Colr.com or TheColorApp.com instead of just "Color" will impede consumers.
2. It makes you seem like a real company with the resource to own a short, properly spelled name rather than yet another creatively spelled SocNet. Talk to some non-early adopters and you'll see how important this can be.
My take is that most people are mocking the amount of money being spent on what is initially seen as a photo sharing service rather than a platform that will allow people to quickly assemble social networks of real life friends. in different contexts.
1. Easy to say/spell. I work for a startup where I have to spell the name of the company every time I talk to someone. We are a medical company so its not a big marketing issue, but having to explain your site is Colr.com or TheColorApp.com instead of just "Color" will impede consumers.
2. It makes you seem like a real company with the resource to own a short, properly spelled name rather than yet another creatively spelled SocNet. Talk to some non-early adopters and you'll see how important this can be.
My take is that most people are mocking the amount of money being spent on what is initially seen as a photo sharing service rather than a platform that will allow people to quickly assemble social networks of real life friends. in different contexts.